Eggsellent Ideas

Like many categories in the dairy department, eggs tend to put up huge sales figures each year, but with generally flat volume, they are easy to take for granted. During the 52 weeks ending March 20, dollar sales of fresh eggs rose 3.4% to more than $3 billion in U.S. food, drug and mass channels, excluding Wal-Mart, according to data from the SymphonyIRI Group. A minor uptick in average prices offset a 1% dip in unit sales. Lots of sales, not a whole lot of excitement.

But, there may be opportunities for retailers to give this profitable category a boost, according to a roundtable of analysts at “Leveraging the Sunny Side of Eggs at Retail,” a recent webinar hosted by SN and sponsored by the American Egg Board. Moderator Phil Lempert, the Supermarket Guru, was joined by Philip Bass, product account manager, Willard Bishop LLC; Jackie Gray, product services practice lead, Willard Bishop; Chad Gregory, senior vice president of United Egg Producers; Mitch Kanter, executive director of the Egg Nutrition Center; and Tim Dorgan, president of TD Consulting.

The average supermarket sells almost $4,900 of eggs each week, with an adjusted gross profit of more than $1,800, according to Willard Bishop's most recent Total Store SuperStudy. However, what makes the category a standout is that it delivers those profits from a relatively small shelf set in the dairy aisle.

“They don't have very much space on the shelf, but they certainly generate a very significant portion of profit for that space,” Gray said.

Bass agreed, noting that the category's excellent 37.4% adjusted gross margin doesn't tell the whole story. The combination of high turns, good margins and small footprint means that even after handling, transportation and activity-based costs are taken into account, “eggs offer retailers the highest true or net profit margin [26.1%] of all the items in the dairy case,” he said.

Increasing sales is not necessarily a matter of giving the category more space. In a survey analyzing the egg consumption habits of more than 1,000 U.S. shoppers, Dorgan said that TD Consulting found opportunities to promote eggs for use in dayparts other than breakfast.

“One third of all egg-user groups — light, medium and heavy [users] — expressed a definite openness to consuming more eggs, if they had more ideas for how to serve them,” he explained.

Breakfast has always been the most typical meal of the day for egg consumption. But, 46% of heavy users said that they sometimes use eggs for lunch, compared with 22% of light users. Considering that eggs are a low-cost protein and many U.S. households are still struggling in a difficult economy, many shoppers could be very receptive to new lunch and dinner ideas that incorporate eggs.

Although eggs are a popular staple with high household penetration, regular usage is surprisingly concentrated. Dorgan's research revealed that 30% of buyers — “super heavy” and “heavy” users — drive 71% of total egg sales. In fact, the top 7% of buyers — the super-heavy users alone — account for as much as one-third of total egg volume in the U.S.

By contrast, light and infrequent users — who together account for 50% of all shoppers — account for only 13% of category sales.

These super-heavy and heavy users are not making a run on eggs every time they shop. Instead, they shop at supermarkets more frequently than other groups.

“These super-heavy and heavy buyers are also heavy users of the grocery store,” Dorgan explained.

These shoppers also tend to be more receptive to nutritional messages about eggs, and view eggs as a good value and an economical meal, which may also make them more receptive to new usage ideas, Dorgan said.

Promoting eggs from a nutritional standpoint has also gotten much easier in the past decade. Eggs were once depicted as an artery-clogging indulgence, but Kanter noted that the “Dietary Guidelines for Americans,” recently released by the U.S. Department of Health and Human Services, praises eggs as a nutrient-dense food and a good source of protein and vitamin D. The guidelines also specifically say that consuming one egg per day does not result in raised blood cholesterol levels, nor does it increase the risk of cardiovascular disease in healthy people.

“It's the first time the guidelines have called out eggs as a healthy food that you could eat on a daily basis,” Kanter said.

In addition, recent research by the U.S. Department of Agriculture indicates that eggs, on average, have less cholesterol and more vitamin D than they did a decade ago.

The USDA randomly sampled eggs from 12 supermarkets across the U.S. Scientists at Virginia Polytechnic Institute and State University found that these eggs had 14% less cholesterol and 64% more vitamin D than eggs sampled in a similar USDA study in 2002. It is not entirely clear why this has happened, but possible reasons include changes in animal feed or breeding, or changes in analytical methods between the studies.

“We think it's pretty exciting news,” Kanter said, explaining that, as a result of this new study, the U.S. government will be updating its nutrition tables. Previously, most tables and textbooks said that one large egg contained 215 milligrams of cholesterol. Now, going forward, government publications will lower that figure to 185 milligrams per large egg.

All of these factors may indicate untapped potential in the egg category. However, retailers should also be aware of in-store issues that can discourage potential buyers from making a purchase. Dorgan's study indicates that about 40% of potential egg purchasers go to the egg case, examine their options and then walk away.

Various reasons were cited: Eggs were broken or were in poor condition, the shopper felt that prices were too high, or their preferred variety was not available, for example.

To prevent these turn-offs and increase sales — particularly among existing fans of the category — Dorgan concluded his portion of the presentation with a list of suggestions for dairy category managers.

Always make sure that the egg case is neat, well organized, and well stocked with eggs that are in good condition. Provide shoppers with recipes and new ideas for ways they can enjoy eggs. Reinforce information regarding the positive nutritional aspects of eggs. Have a way to inform customers about the differences between various types of eggs, should they have questions.

And, finally, draw attention to the category with promotions that highlight the egg category's unique value, flexibility and nutritional story.

“There's a new generation of cooks and non-cooks that needs to be educated, even on the basics,” Dorgan said.